”This has been yet another healthy quarter. A fact specifically worth mentioning is that our net interest margin recovered to the pre-shock level of 2014. This improves the revenues structure and confirms the strength of our business model. Unfortunately, the cost of risk remains high, putting pressure on ROAE”.

Bank Saint Petersburg is ranked 16th in terms of assets and 14th in terms of retail deposits among the Russian banks (Interfax ranking). As at October 1, 2016, the Bank provides services to 1 730 000 individuals and 56 000 corporates; the number of cards issued by the Bank is 1 040 000; the Bank’s card network comprised of 762 ATMs. At present Internet Bank is actively used by 720 000 clients.

3Q 2016 saw a number of changes in the senior management of Bank Saint Petersburg. Following his two-year assignment as the Chairman of the Bank’s Supervisory Board, Mr. Alexander Savelyev returned to the position of the Chairman of the Management Board. The Supervisory Board now is chaired by Ms. Elena Ivannikova, formerly Deputy Chairperson of the Supervisory Board. Mr. Maris Mancinskis, who previously headed Swedbank Latvia and served on the top management team of Swedbank AB, Sweden, was appointed Chief Executive Officer (СЕО), a member of the Management Board.

In developing its digital business, in 3Q 2016 the Bank launched a new state-of-the-art Mobile Bank apps, upgrading their existing capacities and introducing new and unique solutions.

Among other significant events of 3Q 2016 were the opening of a representative office in Novosibirsk. The Bank also started issuing cards of the MIR payment system and acquiring cards JCB, one of the leading international payment systems.

Results summary for 9M 2016

9M 2016 Net interest income increased by 30.5% compared with 9M 2015 and amounted to RUB 16.1 billion. Interest income for 9M 2016 increased by 3.6% compared with 9M 2015; interest income is comprised mostly of interest income on loans and advances to customers (75.0%). Interest expense decreased by 9.4%: interest expenses on retail term deposits decreased by 4.2% (31.3% of total interest expenses) while interest expenses on corporate term deposits decreased by 23.4% (22.0% of total interest expenses). 3Q 2016Net interest income increased by 7.2% compared with 2Q 2016 and amounted to RUB 5.7 billion. Net interest margin (NIM) for 9M 2016 and 3Q 2016 amounted to 4.1% and 4.3% respectively (3.5% for 9M 2015 and 4.0% for 2Q 2016).

9M 2016 Net fee and commission income increased by 19.9% compared with 9M 2015 and amounted to RUB 3.5 billion. Compared with 9M 2015, income from cash and settlement transactions grew by 10.1% (42.6% of total F&C income), income from plastic cards and cheque settlements grew by 54.0% (33.8% of total F&C income), income from guarantees and letters of credit issued grew by 20.5% (17.8% of total F&C income). 3Q 2016 Net fee and commission income increased by 0.9% compared with 2Q 2016 and amounted to RUB 1.2 billion.

As at October 1, 2016, the Bank’s assets amounted to RUB 546.7 billion (-2.8% compared with January 1, 2016; -4.9% compared with July 1, 2016).

Liabilities. Customer deposits totalled RUB 333.7 billion (-2.8% compared with January 1, 2016; -1.6% compared with July 1, 2016). As at October 1, 2016, 56.6% of customer deposits belonged to individuals and 43.4% - to corporate customers. During 9M 2016, the volume of retail deposits increased by 0.5%; the volume of corporate deposits decreased by 6.8%.

Equity and capital. As at October 1, 2016, the shareholders equity amounted to RUB 60.2 billion (+6.1% compared with January 1, 2016; +1.9% compared with July 1, 2016). The Bank’s total capital amounted to RUB 82.1 billion (+1.3% compared with January 1, 2016; +0.4% compared with July 1, 2016). As at October 1, 2016, the Bank’s Tier 1 and total capital adequacy ratios were 10.7% and 16.3% respectively.

Loan portfolio quality. As at October 1, 2016, the share of problem loans in the Bank’s portfolio (total share of overdue loans and impaired not past due loans) amounted to 16.4% (12.4% as at January 1, 2016). The share of overdue loans in the Bank’s portfolio amounted to 7.2% of the total volume of loans. The share of the corporate overdue loans amounted to 7.5% of the total corporate loans; the share of the overdue loans to individuals amounted to 5.4% of the total retail loans. As at October 1, 2016, impaired not past due loans constituted 9.2% of the total volume of loans. The rate of provisions for loan impairment amounted to 11.9% (9.4% as at January 1, 2016). Provision charge for 9M 2016 amounted to RUB 9.4 billion. For 9M 2016, loans in the amount of RUB 2.1 billion were written off.

9M 2016 IFRS Financial Statements are available on the Bank’s website: